Proposal for a COUNCIL DIRECTIVE on the common system of a digital services tax on revenues resulting from the provision of certain digital services
Date: 2018-03-21
Institutions: Directorate-General for Taxation and Customs Union, European Commission
Subjects: corporation tax, digital single market, digital technology, provision of services, tax harmonisation, tax system

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   EUROPEAN COMMISSION  Brussels, 21.3.2018 COM(2018) 148 final 2018/0073 (CNS)  Proposal for a COUNCIL DIRECTIVE on the common system of a digital services tax on revenues resulting from the provision of certain digital services  {SWD(2018) 81} - {SWD(2018) 82}  
 
 
EXPLANATORY MEMORANDUM 

1. 

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CONTEXT OF THE PROPOSAL 

Reasons for and objectives of the proposal  

The  Digital  Single  Market  is  one  of  the  main  political  priorities  of  the  European 
Commission1, which aims at opening up digital opportunities for people and businesses in a 
market  of  over  500  million  EU  consumers.  In  order  to  deliver  on  its  potential,  the  Digital 
Single Market needs a modern and stable tax framework which stimulates innovation, tackles 
market fragmentation and allows all players to tap into the new market dynamics under fair 
and  balanced  conditions.  Ensuring  fair  taxation  of  the  digital  economy  is  also  part  of  the 
European Commission's agenda on a fair and efficient tax system in the European Union2.    

The digital economy is transforming the way we interact, consume and do business. Digital 
companies  are  growing  far  faster  than  the  economy  at  large,  and  this  trend  is  only  set  to 
continue. Digital technologies bring many benefits to society and, from a tax perspective, they 
create  opportunities  for  tax  administrations  and  offer  solutions  to  reduce  administrative 
burdens, facilitate collaboration between tax authorities, as well as addressing tax evasion.  

However, policy makers are currently struggling to find solutions which can ensure a fair and 
effective  taxation  as  the  digital  transformation  of  the  economy  accelerates,  given  that  the 
existing corporate taxation rules are outdated and do not capture this evolution. In particular, 
the current rules no longer fit the present context where online trading across borders with no 
physical  presence  has  been  facilitated,  where  businesses  largely  rely  on  hard-to-value 
intangible  assets,  and  where  user  generated  contents  and  data  collection  have  become  core 
activities for the value creation of digital businesses.  

At  the  international  level,  the  Organisation  for  Economic  Co-operation  and  Development 
(OECD) already recognised, in its Action 1 report3 which was released in 2015 as part of the 
OECD/G20 Base Erosion and Profit Shifting (BEPS) project, that digitalisation and some of 
the  resulting  business  models  present  challenges  for  international  taxation.  Following  that 
report,  the  G20  Finance  Ministers  reiterated  their  support  for  the  OECD's  work  on  taxation 
and digitalisation. Hence, the OECD has been working on an interim report4 on the taxation of 
the digital economy which was presented to the G20 Finance Ministers in March 2018.  The 
interim report examines the need to adapt the international tax system to the digitalisation of 
the economy and identifies the elements to be taken into account by those countries wishing 
to introduce interim measures to address the tax challenges arising from digitalisation. 

At Union level, such challenges were identified in the Communication of the Commission "A 
Fair and Efficient Tax System in the European Union for the Digital Single Market"5, adopted 
on 21 September 2017. The current initiative was also mentioned in President Juncker's letter 

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COM(2015) 192 final. 
COM(2015) 302 final.  
OECD (2015), 'Addressing the Tax Challenges of the Digital Economy: Action 1 – 2015 Final Report', 
OECD Publishing, Paris.  
OECD (2018), 'Tax  Challenges  Arising  from  Digitalisation  – Interim  Report  2018:  Inclusive 
Framework on BEPS', OECD Publishing, Paris. 
COM(2017) 547 final. 

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of  intent  accompanying  the  State  of  the  Union  Address  20176.  As  regards  Member  States, 
several EU Finance Ministers co-signed a political statement ("Joint initiative on the taxation 
of  companies  operating  in  the  digital  economy")  that  supported  EU  law  compatible  and 
effective solutions "based on the concept of establishing a so-called 'equalisation tax' on the 
turnover  generated  in  Europe  by  the  digital  companies"7.  This  was  followed  by  the 
conclusions adopted on 19 October 2017 by the European Council8 that underlined the "need 
for  an  effective  and  fair  taxation  system  fit  for  the  digital  era".  Furthermore,  the  ECOFIN 
Council  Conclusions  of  5  December  20179  noted  the  interest  of  many  Member  States  for 
temporary measures, such as a levy based on revenues from digital activities in the Union, and 
considered that these measures could be assessed by the Commission.  

This proposal answers these calls for action, and addresses in an interim way the problem that 
the current corporate tax rules are inadequate for the digital economy.  

The  current  corporate  tax  rules  were  conceived  for  traditional  businesses.  The  existing  tax 
rules  are  built  on  the  principle  that  profits  should  be  taxed  where  the  value  is  created. 
However,  they  were  mainly  conceived  in  the  early  20th  century  for  traditional  "brick  and 
mortar" businesses and define what triggers a right to tax in a country (where to tax) and how 
much of corporate income is allocated to a country (how much to tax) largely based on having 
a physical presence in that country. That means that non-tax residents become liable to tax in 
a  country  only  if  they  have  a  presence  that  amounts  to  a  permanent  establishment  there. 
However,  such  rules  fail  to  capture  the  global  reach  of  digital  activities  where  physical 
presence  is  not  a  requirement  anymore  in  order  to  be  able  to  supply  digital  services. 
Moreover, digital business have different characteristics than traditional ones in terms of how 
value  is  created,  due  to  their  ability  to  conduct  activities  remotely,  the  contribution  of  end-
users in their value creation, the importance of intangible assets, as well as a tendency towards 
winner-takes-most market structures rooted in the strong presence of network effects and the 
value of big data.  

The  application  of  the  current  corporate  tax  rules  to  the  digital  economy  has  led  to  a 
misalignment  between  the  place  where  the  profits  are  taxed  and  the  place  where  value  is 
created,  notably  in  the  case  of  business  models  heavily  reliant  on  user  participation.  This 
poses a double challenge from a tax perspective. Firstly, the input obtained by a business from 
users, which actually constitutes the creation of value for the company, could be located in a 
tax jurisdiction where the company carrying out a digital activity is not physically established 
(and thus not established for tax purposes according to the current rules) and where therefore 
the profits generated from such activities cannot be taxed. Secondly, even where a company 
has  a  permanent  establishment  in  the  jurisdiction  where  the  users  are  located,  the  value 
created by user participation is not taken into account when deciding how much tax should be 
paid  in  each  country.  This  has  also  consequences  from  the  perspective  of  the  risk  to 

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State of the Union 2017. Letter of intent to President Antonio Tajani and to Prime Minister Jüri Ratas, 
13  September  2017,  accessible  at  https://ec.europa.eu/commission/sites/beta-political/files/letter-of-
intent-2017_en.pdf.  
Political  statement:  joint  initiative  on  the  taxation  of  companies  operating  in  the  digital  economy  – 
http://www.mef.gov.it/inevidenza/banner/170907_joint_initiative_digital_taxation.pdf 
submitted  by 
Germany, France, Italy and Spain to the Estonian Presidency of the Council in September 2017. 
European Council meeting (19 October 2017) – Conclusions (doc. EUCO 14/17).  
Council Conclusions of 5 December 2017 – Responding to the challenges of taxation of profits of the 
digital economy (FISC 346 ECOFIN 1092).  

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artificially  avoid  permanent  establishment  rules,  creates  distortion  of  competition  between 
digital market players, and has a negative impact on revenues. 

The  Commission  has  acknowledged  that  the  ideal  approach  would  be  to  find  multilateral, 
international solutions to taxing the digital economy given the global nature of this challenge. 
The  Commission  is  working  closely  with  the  OECD  to  support  the  development  of  an 
international  solution.  However,  progress  at  international  level  is  challenging,  due  to  the 
complex nature of the problem and the wide variety of issues that need to be addressed, and 
reaching international consensus may take time. This is why the Commission has decided to 
take action and is proposing today to adapt the corporate tax rules at Union level so that they 
are  fit  for  the  characteristics  of  digital  businesses10  and  to  recommend  that  Member  States 
extend  this  comprehensive  solution  to  their  double  taxation  treaties  with  non-Union 
jurisdictions11.  Whilst  the  ECOFIN  Council  also  stressed  in  its  conclusions  of  5  December 
2017 its preference for a global solution endeavouring to closely monitor future international 
developments and consider appropriate responses, it welcomed EU action. Despite the present 
proposals, work  at  the OECD  level  is  essential  in  order  to  reach  a  global  consensus  on  this 
topic. The Commission will closely follow the developments.  

In  the  wait  of  the  comprehensive  solution,  which  may  take  time  to  adopt  and  implement, 
Member States face pressure to act on this issue, given the risk that their corporate tax bases 
are significantly eroded over time, and also due to the perceived unfairness of the situation. 
While  unilateral  measures  are  in  place  or  are  concretely  planned  in  10  Member  States  for 
addressing  this  problem  in  a  limited  way,  the  trend  has  been  increasing  and  the  measures 
adopted are very diverse in terms of scope and their rationale. Such uncoordinated measures 
taken  by  Member  States  individually  risk  further  fragmenting  the  Single  Market  and  distort 
competition,  hampering  the  development  of  new  digital  solutions  and  the  Union's 
competitiveness as a whole.  

Hence, it is necessary for the Commission to act and to propose a harmonised approach on an 
interim solution that tackles this problem in a targeted way. To this extent, this proposal sets 
out  the  common  system  of  a  tax  on  the  revenues  derived  from  the  supply  of  certain  digital 
services  by  taxable  persons  (hereinafter  "Digital  Services  Tax"  or  "DST").  The  specific 
objective of this proposal is to put forward a measure that targets the revenues stemming from 
the  supply  of  certain  digital  services  and  that  is  easy  to  implement  and  helps  to  level  the 
playing field in the interim period until a comprehensive solution is in place.  

This is in line with the general objectives of this proposal, whose aim is:  

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to protect the integrity of the Single Market and to ensure its proper functioning; 

to  make  sure  that  the  public  finances  within  the  Union  are  sustainable  and  that  the 
national tax bases are not eroded; 

to ensure that social fairness is preserved and that there is a level playing field for all 
businesses operating in the Union; and 

Proposal  for  a  Council  Directive  laying  down  rules  relating  to  the  corporate  taxation  of  a  significant 
digital presence (COM(2018) 147 final).    
Commission  Recommendation  relating  to  the  corporate  taxation  of  a  significant  digital  presence 
(C(2018) 1650 final).  

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– 

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to fight against aggressive tax planning and to close the gaps that currently exist in 
the international rules which makes it possible for some digital companies to escape 
taxation in countries where they operate and create value.  

Consistency with existing policy provisions in the policy area 

This proposal is part of the efforts being undertaken at Union and international level in order 
to adapt the current tax framework to the digital economy.  

At  international  level,  the  challenge  of  ensuring  that  all  actors  in  the  digital  economy  are 
fairly  taxed  on  their  income  was  already  identified  under  the  Action  1  of  the  OECD/G20 
BEPS  project  and  the  OECD  has  been  working  on  an  interim  report  on  the  taxation  of  the 
digital economy which was presented to the G20 Finance Ministers in March 2018.  

At  Union  level,  fair  tax  rules  for  the  taxation  of  the  digital  economy  are  part  of  the 
Commission's fair taxation agenda, which will complement the improvements of the corporate 
tax framework achieved in recent years. In this respect, the Commission relaunched in 2016 
the proposal on a Common Consolidated Corporate Tax Base (CCCTB)12, which will provide 
a  competitive,  fair  and  robust  framework  for  taxing  companies  in  the  Single  Market.  In  the 
area of VAT, the Commission is also addressing the challenges posed by the digital economy 
with its proposal on e-commerce which the Council adopted in December 201713, which is in 
line with other legislative measures laid down in the 2016 Action Plan on VAT14. 

This  proposal  is  part  of  a  package  which  also  includes  a  proposal  for  a  Directive  on  a 
comprehensive solution15, a Recommendation to Member States to reflect the comprehensive 
solution in their double taxation treaties with non-Union jurisdictions16 and a Communication 
setting  the  context  and  explaining  the  articulation  between  the  proposals17.  The  principles 
underpinning  this  proposal  and,  in  particular,  the  notion  of  user  value  creation  are  aligned 
with the proposal for a Directive on a comprehensive solution and the Recommendation, as 
explained in the Communication. Notably, this interim measure covers those cases where the 
contribution  of  users  to  the  creation  of  value  for  a  company  is  more  significant,  while  the 
concept  of  user  value  creation  is  also  the  factor  which  the  comprehensive  solution  aims  to 
reflect in the corporate tax framework.  

Consistency with other Union policies 

• 
This  proposal  is  also  consistent  with  the  Digital  Single  Market  strategy18,  where  the 
Commission  committed  to  ensure  access  to  online  activities  for  individuals  and  businesses 
under conditions of fair competition, as well as to open up digital opportunities for people and 
business and enhance Europe's position as a world leader in the digital economy. 

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COM(2016) 685 final and COM(2016) 683 final.  
Council  Directive  (EU)  2017/2455  of  5  December  2017  amending  Directive  2006/112/EC  and 
Directive  2009/132/EC  as  regards  certain  value  added  tax  obligations  for  supplies  of  services  and 
distance sales of goods (OJ L 348, 29.12.2017, p. 7).  
COM(2016) 148 final. 
COM(2018) 147 final. 
C(2018) 1650 final. 
COM(2018) 146 final. 
COM(2015) 192 final.  

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2. 

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LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 

Legal basis 

The  proposed  Directive  is  based  on  Article  113  of  the  Treaty  on  the  Functioning  of  the 
European  Union  (TFEU).  This  provision  enables  the  Council,  acting  unanimously  in 
accordance with a special legislative procedure and after consulting the European Parliament 
and the European Economic and Social Committee, to adopt provisions for the harmonisation 
of  Member  States'  legislation  concerning  other  forms  of  indirect  taxation  to  the  extent  that 
such  harmonisation  is  necessary  to  ensure  the  establishment  and  the  functioning  of  the 
internal market and to avoid distortion of competition.  

• 

Subsidiarity (for non-exclusive competence)  

The proposal  is consistent with the principle of subsidiarity as  set out in Article 5(3)  of the 
Treaty on European Union (TEU). In the wait of a common and coordinated action at Union 
level  to  reform  the  corporate  tax  framework  to  cover  the  digital  activities  of  companies, 
Member States may introduce unilateral interim measures to address the challenges of taxing 
the  digital  economy  companies.  Some  of  such  measures,  which  can  be  of  a  very  diverse 
nature, are already in place or are being planned by Member States. In this respect, EU action 
is  necessary in  order  to mitigate the fragmentation of the Single Market and the creation  of 
distortions of competition within the Union due to  the adoption of such divergent  unilateral 
actions  at  national  level.  Moreover,  an  EU  solution  rather  than  different  national  policies 
entails a reduction in the compliance burden for businesses subject to the new rules, and also 
gives  a  strong  sign  to  the  international  community  as  to  the  commitment  of  the  EU  to  act 
when it comes to ensuring the fair taxation of the digital economy.  

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Proportionality 

The preferred option is consistent with the principle of proportionality, that is, it does not go 
beyond  what  is  necessary  to  meet  the  objectives  of  the  Treaties,  in  particular  the  smooth 
functioning of the Single Market. As follows from the subsidiarity test, it is not possible for 
Member States to address the problem without hampering the Single Market.  Moreover, the 
present  proposal  aims  at  setting  a  common  structure  of  the  tax,  while  leaving  sufficient 
margin  of  manoeuvre  for  Member  States  when  it  comes  to  actual  setting  of  certain 
administrative  aspects  related  to  the  measure,  such  as  accounting,  record-keeping  and  other 
obligations intended to ensure that the DST due is effectively paid. Member States can also 
adopt  measures  concerning  the  prevention  of  evasion,  avoidance  and  abuse  with  respect  to 
DST,  and  they  retain  the  capacity  to  enforce  payment  of  DST  and  to  carry  out  tax  audits 
according to their own rules and procedures. See also section 9.4.2 of the impact assessment 
accompanying this proposal19.  

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Choice of the instrument 

A  Directive  is  proposed,  which  is  the  only  available  instrument  under  Article  113  of  the 
TFEU.  

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SWD(2018) 81 final. 

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3. 

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RESULTS 
CONSULTATIONS AND IMPACT ASSESSMENTS 

EX-POST 

EVALUATIONS, 

OF 

STAKEHOLDER 

Stakeholder consultations 

 The consultation strategy has focused on three main groups of stakeholders: Member States' 
tax administrations, businesses, and citizens. The two main consultation activities consisted in 
the  open  public  consultation,  which  received  a  total  of  446  replies  over  12  weeks  (from  26 
October 2017 to 3 January 2018), and a targeted survey sent to all tax administrations within 
the  Union.  The  members  of  the  Platform  for  Tax  Good  Governance  (made  up  of  all  tax 
authorities within the Union and 15 organisations representing businesses, civil society, and 
tax practitioners) have also been informed about this initiative and their opinions sought out. 
Spontaneous contributions have also been taken into account. As can be seen in Annex 2 of 
the impact assessment accompanying this proposal, a tax on the revenues stemming from the 
provision  of  certain  digital  services  was  found  to  be  the  preferred  option  for  an  interim 
solution  by  stakeholders  (10  out  of  21  national  tax  authorities,  as  well  as  53%  of  the 
respondents to the open public consultation).  

• 

Impact assessment 

The  impact  assessment  for  the  proposal  was  considered  by  the  Commission's  Regulatory 
Scrutiny  Board  on  7  February  2018.  The  Board  issued  a  positive  opinion  on  the  proposal 
together with some recommendations, which have been taken into account in the final version 
of the impact assessment. The opinion of the Board, the recommendations and an explanation 
of  how  they  have  been  taken  into  account  are  included  in  Annex  1  of  the  Staff  Working 
Document accompanying this proposal20. See Annex 3 of that document for  an overview of 
who would be affected by this proposal and how.  

The  impact  assessment  of  this  proposal  examined  several  possible  options  for  an  interim 
solution. Due to several legal constraints it became nonetheless clear that the focus ought to 
be  on  a  tax  on  revenues  resulting  from  the  provision  of  certain  digital  services.  Several 
options  were  considered  as  regards  the  design  of  such  DST  (see  section  9.2  of  the  impact 
assessment),  and  in  particular  its  scope  (which  services  are  covered),  the  application  of  a 
turnover threshold (which businesses are covered), the tax rate, and the collection of the tax.   

As  explained  in  the  impact  assessment,  the  preferred  design  of  this  option  is  a  tax  with  a 
narrow  scope,  levied  on  the  gross  revenues  of  a  business  resulting  from  the  provision  of 
certain digital services where user value creation is central, and where only businesses above 
two revenue-related thresholds would qualify as taxable persons liable for the payment of the 
tax.  

4. 

BUDGETARY IMPLICATIONS 

The proposal will have no implications for the EU budget.  

5. 

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OTHER ELEMENTS 

Implementation plans and monitoring, evaluation and reporting arrangements 

The  Commission  will  monitor  the  implementation  of  the  Directive  once  adopted  and  its 
application  in  close  cooperation  with  Member  States  and  evaluate  whether  this  initiative  is 

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SWD(2018) 81 final. 

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functioning properly and the extent to which its objectives have been achieved, based on the 
indicators set out in section 10 of the impact assessment accompanying this proposal.  

• 

Detailed explanation of the specific provisions of the proposal 

Definitions (Article 2) 

This Article provides definitions of various concepts necessary for applying the provisions in 
the Directive.  

Taxable revenues (Article 3) 

This  Article  defines  which  revenues  qualify  as  taxable  revenues  for  the  purposes  of  this 
Directive.  

DST is a tax with a targeted scope, levied on the revenues resulting from the supply of certain 
digital services characterised by user value creation. The services falling within the scope of 
DST  are  those  where  the  participation  of  a  user  in  a  digital  activity  constitutes  an  essential 
input  for  the  business  carrying  out  that  activity  and  which  enable  that  business  to  obtain 
revenues therefrom. In other words, the business models captured by this Directive are those 
which  would  not  be  able  to  exist  in  their  current  form  without  user  involvement.  The  role 
played by the users of these digital services is unique and more complex than that traditionally 
adopted by a customer. These services can be provided remotely, without the provider of the 
services  necessarily  being  physically  established  in  the  jurisdiction  where  the  users  are  and 
value is  created.  Therefore, such  business  models are responsible for the greatest  difference 
between  where  profits  are  taxed  and  where  value  is  created.  However,  what  is  subject  to 
taxation  are  the  revenues  obtained  from  the  monetisation  of  the  user  input,  not  the  user 
participation in itself.  

There are several ways in which user participation can contribute to the value of a business. 
For  instance,  digital  businesses  can  derive  data  about  users'  activities  on  digital  interfaces, 
which is typically used in order to target advertising at such users, or which can be transmitted 
to third parties for consideration. Another way is through the active and sustained engagement 
of  users  in  multi-sided  digital  interfaces,  which  build  on  network  effects  where,  broadly 
speaking, the value of the service increases with the number of users using the interface. The 
value for such interfaces lies with the connections between users and the interaction between 
them,  which  may  often  imply  users  uploading  and  sharing  information  within  the  network. 
Such multi-sided digital interfaces may also facilitate the provision of underlying supplies of 
goods  or  services  directly  between  users,  which  constitutes  another  clear  form  of  user 
participation.  

Based on the several forms of user participation described above, the revenues included in the 
scope of this tax (taxable revenues) would be those derived from the provision of any of the 
following services (taxable services), as set out in Article 3(1): 

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services consisting in the placing on a digital interface of advertising targeted at users 
of that interface; as well as the transmission of data collected about users which has 
been generated from such users' activities on digital interfaces; 

services consisting in the making available of multi-sided digital interfaces to users, 
which may also be referred to as "intermediation services", which allow users to find 
other users and to interact with them, and which may also facilitate the provision of 
underlying supplies of goods or services directly between users.  

The supply of advertising services consisting in the placing on a digital interface of a client's 
advertising targeted at users of that interface is defined in Article 3(1)(a) in a broad sense in 
line with the business models examined. This is because the placing of such advertising in a 

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digital context constitutes the way in which the company enabling the advertising to appear 
on a digital interface typically monetises user traffic and the user data taken into account for 
the  purposes  of  the  placement.  The  definition  of  the  service  does  not  take  into  account 
whether  the  supplier  of  the  advertising  service  owns  the  digital  interface  on  which  the 
advertisement appears. However, it is clarified in Article 3(3) that in cases where the supplier 
of the advertising service and the owner of the digital interface are different entities, the latter 
is not considered to have provided a taxable service falling within Article 3(1)(a). This is in 
order to avoid possible cascading effects or double taxation of the same revenues (part of the 
revenues obtained by the entity placing a client's advertising will be paid to the owner of the 
digital  interface  where  such  an  advertisement  is  to  appear,  in  exchange  for  the  renting  of 
digital space in that interface).  

Intermediation  services  are  defined  in  Article  3(1)(b)  by  reference  to  multi-sided  digital 
interfaces  enabling  users  to  find  other  users  and  to  interact  with  them,  which  is  the  aspect 
allowing the providers of such services to profit from network effects. The capacity of these 
interfaces  to  create  a  link  between  users  distinguishes  intermediation  services  from  other 
services which may also be seen as facilitating the interaction between users, but where users 
cannot  get  in  touch  with  each  other  unless  they  have  already  established  contact  by  other 
means, such as instant messaging services. The value creation for such other services, which 
can  be  generally  defined  as  communication  or  payment  services,  lies  with  the  development 
and sale of support software which enables that interaction to take place, and it is less attached 
to the users' involvement. Therefore, communication or payment services remain outside the 
scope of the tax, as clarified in Article 3(4)(a).  

For cases involving multi-sided digital interfaces that facilitate an underlying supply of goods 
or  services  directly  between  the  users  of  the  interface,  the  revenues  obtained  by  users  from 
those  transactions  remain  outside  the  scope  of  the  tax.  The  revenues  resulting  from  retail 
activities  consisting  in  the  sale  of  goods  or  services  which  are  contracted  online  via  the 
website of the supplier of such goods or services (which may involve what is usually referred 
to  as  "e-commerce")  are  also  outside  the  scope  of  DST,  because  the  value  creation  for  the 
retailer lies with the goods or services provided and the digital interface is simply used as a 
means of communication.  

Article  3(4)(a)  also  clarifies  that  services  by  an  entity  to  users  through  a  digital  interface 
consisting in the supply of digital content such as video, audio or text, either owned by that 
entity  or  which  that  entity  has  acquired  the  rights  to  distribute,  are  not  to  be  regarded  as 
intermediation services and should therefore be excluded from the scope of the tax, given that 
it is less certain the extent to which user participation plays a central role in the creation of 
value for the company. It is necessary to clarify this point because some suppliers of digital 
content through a digital interface might allow some sort of interaction between the recipients 
of such content and could thus be seen as falling within the definition of multi-sided digital 
interfaces  providing  intermediary  services.  However,  in  such  circumstances  the  interaction 
between users remains ancillary to a supply of digital content where the sole or main purpose 
for a user is to receive the digital content from the entity making available the digital interface 
(e.g.  the  supply  of  a  video  game  by  an  entity  to  a  user  through  a  digital  interface  would 
constitute  a  supply  of  digital  content  by  that  entity  falling  outside  the  scope  of  DST, 
regardless of whether such a user is able to play against other users and therefore some sort of 
interaction is allowed between them).  

The  supply  of  digital  content  by  an  entity  to  users  through  a  digital  interface,  which  is  a 
service  outside  the  scope  of  DST,  should  be  distinguished  from  the  making  available  of  a 
multi-sided  digital  interface  through  which  users  can  upload  and  share  digital  content  with 
other  users,  or  the  making  available  of  an  interface  that  facilitates  an  underlying  supply  of 

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digital  content  directly  between  users.  These  latter  services  constitute  a  service  of 
intermediation  by  the  entity  making  available  the  multi-sided  digital  interface  and  therefore 
fall  within  the  scope  of  DST,  regardless  of  the  nature  of  the  underlying  transaction.  Hence, 
Article 3(4)(a) emphasises that the supply of digital content falling outside the scope of DST 
must  be  made  by  the  entity  making  available  the  digital  interface  through  which  the  digital 
content is supplied, not by users of that interface to other users.  

Taxable  services  consisting  in  the  transmission  of  data  collected  about  users  are  defined  in 
Article 3(1)(c) by reference to  data which has  been  generated from such  users' activities on 
digital interfaces. This is because the services within the scope of DST are those using digital 
interfaces as a way to create user input, rather than those services using interfaces as a way to 
transmit data generated otherwise. DST is therefore not a tax on the collection of data, or the 
use of data collected by a business for the internal purposes of that business, or the sharing of 
data collected by a business with other parties for free. What DST targets is the transmission 
for  consideration  of  data  obtained  from  a  very  specific  activity  (users'  activities  on  digital 
interfaces).  

Points (b) and (c) of Article 3(4) explain that services regulated in points (1) to (9) of Section 
A of Annex I to Directive 2014/65/EU of the European Parliament and of the Council21 and 
provided  by  trading  venues  or  systematic  internalisers,  as  defined  in  that  Directive,  or  by 
regulated  crowdfunding  service  providers  do  not  fall  within  the  scope  of  DST.  In  addition, 
services  consisting  in  the  facilitation  of  the  granting  of  loans  and  provided  by  regulated 
crowdfunding service providers do not fall within the scope of DST. Regulated crowdfunding 
service  providers  refers  to  providers  of  services  who  are  subject  to  any  future  Union  rules 
adopted under Article 114 of the TFUE for the regulation of crowdfunding services.  

Multi-sided digital interfaces which allow users to receive or to know about the existence of 
trade  execution  services,  investment  services  or  investment  research  services,  such  as  those 
made  available  by  the  entities  referred  to  above,  often  imply  user  interaction.  However,  the 
user  does  not  play  a  central  role  in  the  creation  of  value  for  the  entity  making  available  a 
digital interface. Instead, the value lies with the capacity of such an entity to bring together 
buyers and sellers of financial products under specific and distinctive conditions which would 
not occur otherwise (compared, for instance, to transactions concluded outside such interfaces 
directly  between  the  counterparties).  A  service  consisting  in  making  available  a  digital 
interface  by  such  an  entity  goes  beyond  the  mere  facilitation  of  transactions  in  financial 
instruments between users of such an interface. In particular, the regulated services which are 
excluded from the scope of this Directive aim at providing a safe environment for financial 
transactions. The entity providing these services therefore determines the specific conditions 
under  which  such  financial  transactions  can  be  executed  in  order  to  guarantee  essential 
elements such as the quality of execution of the transactions, the level of transparency in the 
market  and  fair  treatment  of  investors.  Finally,  such  services  have  the  essential  and  distinct 
objective of facilitating funding, investments or savings.  

As  regards  crowdfunding  platforms,  investment  and  lending  based  crowdfunding  is  outside 
the  scope  of  the  tax  because  the  providers  of  such  services  play  the  same  role  as  that  of 
trading venues and systematic internalisers, and hence do not constitute mere intermediation. 
However, services provided by crowdfunding platforms which are not investment and lending 
based  and  constitute  intermediation,  such  as  donation  or  reward  based  crowdfunding,  or 

21 

Directive 2014/65/EU  of  the European Parliament  and of  the  Council of 15  May 2014 on  markets  in 
financial  instruments  and  amending  Directive  2002/92/EC  and  Directive  2011/61/EU  (OJ  L  173, 
12.6.2014, p. 349). 

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services  provided  by  such  platforms  consisting  in  the  placing  of  advertising,  fall  within  the 
scope of this Directive. 

transmission  by 

Since  data 
internalisers  and  regulated 
trading  venues,  systematic 
crowdfunding service providers is limited to and forms part of the provision of the regulated 
financial services described above and is regulated as such under Union law, the provision of 
data transmission services by those entities should also be excluded from the scope of DST, as 
laid down in Article 3(5).  

Article 3(2) clarifies that DST is levied on the gross revenues of a business resulting from the 
provision of the services falling within the scope of the tax, net of value added tax and other 
similar taxes.  

Article  3(7)  clarifies  that  revenues  resulting  from  the  provision  of  taxable  services  between 
entities  of  a  consolidated  group  for  financial  accounting  purposes  do  not  qualify  as  taxable 
revenues.  

In  accordance  with  Article  3(8),  where  an  entity  of  a  consolidated  group  for  financial 
accounting purposes provides a taxable service to a third party but the remuneration for such a 
service  is  obtained  by  another  entity  within  the  group,  the  remuneration  is  deemed  to  have 
been  obtained  by  the  entity  providing  the  taxable  services.  This  provision  is  a  safeguard  in 
order to preclude an entity providing taxable services and obtaining the revenues derived from 
such services through another entity of the same group from escaping DST liability.  

Taxable person (Article 4) 

In accordance with Article 4(1), an entity above both of the following thresholds qualifies as a 
taxable person for the purposes of the DST: 

– 

– 

the total amount of worldwide revenues reported by the entity for the latest complete 
financial year for which a financial statement is available exceeds EUR 750 000 000; 
and  

the total amount of taxable revenues obtained by the entity within the Union during 
that financial year exceeds EUR 50 000 000.  

The  first  threshold  (total  annual  worldwide  revenues)  limits  the  application  of  the  tax  to 
companies of a certain scale, which are those which have established strong market positions 
that allow them to benefit relatively more from network effects and exploitation of big data 
and thus build their business models around user participation. Such business models, which 
lead  to  higher  differences  between  where  profits  are  taxed  and  where  value  is  created,  are 
those falling within the scope of the tax. The economic capacity of the businesses qualifying 
as taxable persons should be seen as indicating their capacity to attract a high volume of users, 
which  is  necessary  for  such  business  models  to  be  viable.  Moreover,  the  opportunity  of 
engaging  in  aggressive  tax  planning  lies  with  larger  companies.  That  is  why  the  same 
threshold has been proposed in other Union initiatives, such as the CCCTB. Such a threshold 
is also intended to bring legal certainty and make it easier and less costly for businesses and 
tax authorities to determine whether an entity is liable to DST, especially given that some of 
them  may  not  record  separately  the  revenues  from  the  activities  falling  within  the  scope  of 
this  tax.  This  threshold  should  also  exclude  small  enterprises  and  start-ups  for  which  the 
compliance burdens of the new tax would be likely to have a disproportionate effect.  

The  second  threshold  (total  annual  taxable  revenues  in  the  Union),  in  contrast,  limits  the 
application of the tax to cases where there is a significant digital footprint at Union level in 
relation  to  the  revenues  covered  by  DST.  This  threshold  is  set  at  Union  level  in  order  to 
disregard differences in market sizes which may exist within the Union.  

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If  the  business  belongs  to  a  consolidated  group  for  financial  accounting  purposes,  the 
thresholds  have  to  be  applied  in  respect  of  total  consolidated  group  revenues,  as  set  out  in 
Article 4(6).  

Whether  established  in  a  Member  State  or  in  a  non-Union  jurisdiction,  a  business  meeting 
both  conditions  above  would  qualify  as  a  taxable  person.  Depending  on  where  the  taxable 
person  is  established,  the  scenarios  where  DST  liability  may  arise  can  involve  a  taxable 
person  established  in  a  non-Union  jurisdiction  having  to  pay  DST  in  a  Member  State,  a 
taxable person established in a Member State having to pay DST in another Member State, or 
a  taxable  person  established  in  a  Member  State  having  to  pay  DST  in  that  same  Member 
State.  

Place of taxation (Article 5) 

Article 5 determines which proportion of the taxable revenues obtained by an entity has to be 
treated as obtained in a Member State for the purposes of this tax. In line with the concept of 
user value creation that underpins the objective scope of DST, this provision determines that 
DST is due in the Member State or Member States where the users are located.  

This  approach  follows  the  logic  that  it  is  the  user  involvement  in  the  digital  activities  of  a 
company the one generating the value for that company, which may not necessarily entail a 
payment from the users' side (e.g. viewers of advertising on a digital interface); or which may 
involve payment from some users only (e.g. multi-sided digital interfaces where only certain 
users have to pay for accessing the interface, while other users have free access). Therefore, it 
is the Member State where the user is located the one with taxing rights in respect of DST, 
regardless of whether the user has contributed in money to the generation of revenue for the 
company. Specific rules to determine when a user is deemed to be located in a Member State 
are provided.  

The taxable revenues resulting from the provision of a taxable service have to be treated for 
the  purposes  of  this  Directive  as  obtained  in  a  Member  State  in  a  tax  period  if  a  user  with 
respect  to  such  services  is  deemed  to  be  located  in  that  Member  State  in  that  tax  period 
according  to  the  rules  in  Article  5(2),  which  have  to  be  applied  for  each  type  of  taxable 
service.  In  the  case  of  users  involved  in  a  taxable  service  which  are  located  in  different 
Member  States  or  non-Union  jurisdictions,  the  taxable  revenues  obtained  by  an  entity  from 
the provision of that service would have to be distributed to each Member State proportionally 
and according to the several allocation keys laid down in Article 5(3) for each type of taxable 
service. Such allocation keys have been set out taking into account the nature of each of the 
taxable services and, in particular, what triggers the receipt of revenues for the provider of the 
service.   

In the case of a taxable service consisting in the placing of advertising on a digital interface, 
the  number  of  times  an  advertisement  has  appeared  on  users'  devices  in  a  tax  period  in  a 
Member  State  is  taken  into  account  for  the  purposes  of  determining  the  proportion  of 
revenues to be allocated in that tax period to that Member State.  

As  regards  the  making  available  of  multi-sided  digital  interfaces,  in  order  to  determine  the 
proportion  of  taxable  revenues  to  be  allocated  to  a  Member  State,  a  distinction  is  made 
between  cases  where  the  interface  facilitates  underlying  transactions  directly  between  users 
and cases where it does not. In cases involving the facilitation of underlying transactions, the 
allocation of taxable revenues in a tax period to a Member State is carried out on the basis of 
the number of users who conclude such a transaction in that tax period while using a device in 
that Member State. This is because that is the action usually generating revenues for the entity 
making  the  interface  available.  Taxing  rights  over  the  revenues  of  the  business  making 

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available the interface are allocated to Member States where the users concluding underlying 
transactions  are  located,  irrespective  of  whether  the  users  are  the  sellers  of  the  underlying 
goods  or  services  or  the  buyers.  This  is  because  both  of  them  generate  value  for  the  multi-
sided  digital  interface  through  their  participation,  given  that  the  role  of  the  interface  is  to 
match  supply  and  demand.  However,  if  the  intermediation  service  does  not  involve  the 
facilitation  of  underlying  transactions,  revenues  are  typically  obtained  through  periodic 
payments after having registered or opened an account on a digital interface. Hence, for the 
purposes of allocating taxable revenues to a Member State in a tax period, the number of users 
in that tax period holding an account which was opened using a device in that Member State, 
whether opened during that tax year or an earlier one, is taken into account.  

As regards the transmission of data collected about users, the allocation of taxable revenues in 
a  tax  period  to  a  Member  State  takes  into  account  the  number  of  users  from  whom  data 
transmitted in that tax period has been generated as a result of such users having used a device 
in that Member State.  

Article  5(4)  further  clarifies  that,  for  the  purposes  of  determining  the  place  of  taxation,  the 
place from which the payment for the taxable services is made is not to be taken into account. 
For cases involving the provision of underlying goods or services directly between the users 
of a multi-sided digital interface, the place where such underlying transactions take place is 
not taken into account either.  

Based on the provision in Article 5(5), the users are deemed to be located in the Member State 
of the Internet Protocol (IP) address of the device used by them or, if more accurate, any other 
method  of  geolocation.  The  IP  address  is  a  simple  and  effective  proxy  for  determining  the 
user location. Moreover, if the taxable person is aware by other means of geolocation that the 
user  is  not  located  in  the  Member  State  where  the  IP  address  indicates,  that  taxable  person 
would  still  be  able  to  rely  on  that  other  means  of  geolocation  to  determine  the  place  of 
taxation. 

Chargeability, calculation of the tax and rate (Articles 6-8) 

In  accordance  with  Article  6,  the  new  tax  will  be  chargeable  in  a  Member  State  on  the 
proportion of taxable revenues obtained by a taxable person in a tax period that is treated as 
obtained in that Member State.  

Article 7 lays down the rule on how DST should be calculated.  

Article 8 sets out a single rate across the Union of 3%.  

Obligations (Articles 9-19) 

Articles  9  to  19  provide  the  set  of  obligations  which  would  have  to  be  fulfilled  by  taxable 
persons with DST liability.  

Article 9 clarifies that the taxable person providing taxable services is liable for the payment 
of  the  tax  and  the  fulfilment  of  the  obligations  set  out  in  Chapter  3.  It  also  sets  out  that  a 
consolidated  group  for  financial  accounting  purposes  has  the  option  to  nominate  a  single 
entity  within  that  group  for  the  purposes  of  paying  DST  and  fulfilling  the  obligations  in 
Chapter 3 on behalf of each taxable person in that group who is liable to DST.  

In  order  to  manage  the  administrative  aspects  related  to  this  tax,  a  One-Stop-Shop  (OSS) 
simplification  mechanism  is  made  available  to  all  taxable  persons.  The  functioning  of  the 
OSS  is  based  on  the  idea  that  a  taxable  person  with  DST  liability  in  one  or  more  Member 
State should enjoy a single contact point (the Member State of identification) through which 
all  his  DST  obligations  can  be  fulfilled  (identification,  submission  of  the  DST  return,  and 
payment).  That  Member  State  of  identification is  responsible  to  share  that  information  with 

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the  other  Member  States  where  DST  is  due,  as  well  as  to  transfer  the  proportion  of  DST 
collected on behalf of such other Member States.  

As explained in Article 10, "Member State of identification" means the Member State where a 
taxable person is liable for the payment of DST, unless he has DST liability in more than one 
Member State, in which case he may choose the Member State of identification among them.  

The fact that a taxable person may be resident for corporate income tax purposes in a Member 
State has no impact in determining the Member State of identification for the purposes of the 
DST, given the different nature of the tax. This also intends not to impose a disproportionate 
administrative  burden  on  Member  States  where  a  taxable  person  may  be  established  for 
corporate  taxation  purposes,  but  where  he  may  not  have  any  DST  liability.  Therefore,  a 
taxable person with  DST liability  in several Member States will be able to  make  use  of the 
OSS in his Member State of identification in respect of all his DST obligations, and regardless 
of whether he is tax resident for corporate income tax purposes there. For instance, a taxable 
person with DST liability  in two Member States (Member State A, where he is resident  for 
corporate income  tax purposes, and Member State B, where  he  is not resident for corporate 
income tax purposes) which has chosen Member State B as Member State of identification, 
will be able to fulfil his DST obligations in respect of both Member States A and B through 
the OSS. 

Article 10 establishes an obligation for a taxable person to notify via a self-declaration system 
the Member State of identification that he is liable for the payment of DST in the Union, as 
well as the details to be notified. That taxable person will obtain an identification number in 
accordance with Article 11. If a taxable person ceases to be liable to DST in the Union, he has 
to  notify the Member State of identification  that information in  accordance  with  Article  12, 
and the Member State of identification will delete that taxable person from their identification 
register.  Article  13  clarifies  the  rules  concerning  a  possible  change  in  the  Member  State  of 
identification.  

Moreover, that taxable person must submit a DST return in the Member State of identification 
under Article 14, with the details specified in Article 15. In particular, that means having to 
declare, for each Member State where DST is due for the relevant tax period, the total amount 
of taxable revenues treated as obtained by a taxable person in that Member State together with 
the  DST  due  on  that  amount.  The  total  DST  due  in  all  Member  States  and  the  information 
about the thresholds applicable for the purposes of Article 4 will also have to be reported.  

Payment arrangements are governed by Article 16, which also specifies that possible refunds 
of the tax to taxpayers, once the DST due has been already transferred from the Member State 
of identification to the Member State where that DST was due, should be made by the latter 
directly to that taxable person. In order to avoid discrepancies in the functioning of the OSS, a 
provision  regulating  possible  DST  return  amendments  has  been  introduced  in  Article  17. 
Article  18  concerns  accounting,  record-keeping  and  anti-fraud  measures  which  are  for 
Member  States  to  set  up.  This  provision  also  clarifies  that  the  existence  of  a  OSS  and  a 
Member  State  of  identification  does  not  change  the  fact  that  DST  is  owed  by  the  taxable 
person  directly  to  each  Member  State  where  DST  is  due,  and  that  such  a  Member  State  is 
entitled to enforce the payment of DST directly against the taxable person liable for it and to 
carry out tax audits and control measures.  

Article 19 establishes that every Member State has  to appoint a competent authority for the 
purposes  of  managing  all  administrative  obligations  in  respect  of  DST,  as  well  as  the 
administrative cooperation requirements set out in Chapter 4. 

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Administrative cooperation as regards obligations (Articles 20-23) 

Provisions  laid  down  in  Articles  20-23  govern  the  necessary  exchanges  between  Member 
States as regards the identification of taxable persons and the submission of DST returns, as 
well  as  the  transfer  of  funds  corresponding  to  DST  payments  by  the  Member  State  of 
identification to the other Member States where DST is due.   

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2018/0073 (CNS) 

Proposal for a 

COUNCIL DIRECTIVE 

on the common system of a digital services tax on revenues resulting from the provision 
of certain digital services  

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 113 thereof, 

Having regard to the proposal from the European Commission, 

After transmission of the draft legislative act to the national parliaments, 
Having regard to the opinion of the European Parliament1, 
Having regard to the opinion of the European Economic and Social Committee2,  

Acting in accordance with a special legislative procedure, 

Whereas: 

(1) 

(2) 

(3) 

1 
2 
3 

The global economy is  rapidly becoming digital and, as a result, new ways of doing 
business  have  emerged.  Digital  companies  are  characterised  by  the  fact  that  their 
operations are strongly linked to the internet. In particular, digital business models rely 
to  a  large  extent  on  the  ability  to  conduct  activities  remotely  and  with  limited  or  no 
physical  presence,  on  the  contribution  of  end-users  to  value  creation,  and  on  the 
importance of intangible assets.  

The  current  corporate  taxation  rules  were  mainly  developed  during  the  20th  century 
for traditional businesses. They are based on the idea that taxation should take place 
where  value  is  created.  However,  the  application  of  the  current  rules  to  the  digital 
economy has led to a misalignment between the place where profits are taxed and the 
place where value is created, notably in the case of business models heavily reliant on 
user participation. It has therefore become evident that the current corporate tax rules 
for taxing the profits of the digital economy are inadequate and need to be reviewed.  
That review constitutes an important element of the Digital Single Market3, given that 
the  Digital  Single  Market  needs  a  modern  and  stable  tax  framework  for  the  digital 
economy to stimulate innovation, tackle market fragmentation and allow all players to 
tap into the new market dynamics under fair and balanced conditions.  

OJ C , , p. . 
OJ C , , p. .g 
Communication  from  the  Commission  to  the  European  Parliament,  the  Council  and  the  European 
Economic and Social Committee and the Committee of the Regions 'A Digital Single Market Strategy 
for Europe' (COM(2015) 192 final of 6.5.2015).  

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(4) 

(5) 

(6) 

(7) 

(8) 

(9) 

4 

5 

6 

7 

In its Communication "A Fair and Efficient Tax System in the European Union for the 
Digital Single Market"4 adopted on 21 September 2017, the Commission identified the 
challenges  that  the  digital  economy  posed  for  existing  tax  rules,  and  committed  to 
analyse the policy options available. The ECOFIN Council conclusions of 5 December 
20175  invited  the  Commission  to  adopt  proposals  responding  to  the  challenges  of 
taxing profits in the digital economy, while taking note also of the interest expressed 
by  many  Member  States  for  temporary  measures  aimed  at  revenues  resulting  from 
digital  activities  in  the  Union  that  would  remain  outside  the  scope  of  double  tax 
conventions.  

Given  the  problem  of  taxing  the  digital  economy  is  of  a  global  nature,  the  ideal 
approach would be to find a multilateral, international solution to it. The Commission 
is  actively  engaged  in the international debate for that reason.  Work  at the OECD is 
currently  ongoing.  However,  progress  at  international  level  is  challenging.  Hence, 
action is being taken to adapt the corporate tax rules at Union level6 and to encourage 
agreements  to  be  reached  with  non-Union  jurisdictions7,  so  that  the  corporate  tax 
framework can be made to fit the new digital business models. 

Pending  such  action,  which  may  take  time  to  adopt  and  implement,  Member  States 
face pressure to act on this issue, given the risk that their corporate tax bases are being 
significantly  eroded  over  time.  Uncoordinated  measures  taken  by  Member  States 
individually  can  fragment  the  Single  Market  and  distort  competition,  hampering  the 
development of new digital solutions and the Union's competitiveness as a whole. This 
is why it is necessary to adopt a harmonised approach on an interim solution that will 
tackle this issue in a targeted way until a comprehensive solution is in place.  

That  interim  solution  should  establish  the  common  system  of  a  digital  services  tax 
('DST')  on  revenues  resulting  from  the  supply  of  certain  digital  services  by  certain 
entities. It should be an easy-to-implement measure targeting the revenues stemming 
from the supply of digital services where users contribute significantly to the process 
of  value  creation.  Such  factor  (user  value  creation)  also  underpins  the  action  with 
respect to corporate tax rules, as described in recital (5).  

The  following  elements  of  DST  should  be  defined:  the  taxable  revenues  (what  is 
taxed),  the  taxable  person  (who  is  taxed),  the  place  of  taxation  (what  proportion  of 
taxable  revenues  is  deemed  to  be  obtained  in  a  Member  State  and  when), 
chargeability,  calculation  of  the  tax,  rate,  and  related  obligations  including  a  One-
Stop-Shop collection mechanism.  

DST  should  be  applied  to  revenues  resulting  from  the  provision  of  certain  digital 
services only. The digital services should be ones that are largely reliant on user value 
creation  where  the  difference  between  the  place  where  the  profits  are  taxed  and  the 
place where the users are established is typically greatest. It is the revenues obtained 
from  the  processing  of  user  input  that  should  be  taxed,  not  the  user  participation  in 
itself.  

Communication from the Commission to the European Parliament and the Council 'A Fair and Efficient 
Tax System in the European Union for the Digital Single Market' (COM(2017) 547 final of 21.9.2017).  
Responding  to  the  challenges  of  taxation  of  profits  of  the  digital  economy  –  Council  conclusions  (5 
December 2017) (FISC 346 ECOFIN 1092).  
Proposal  for  a  Council  Directive  laying  down  rules  relating  to  the  corporate  taxation  of  a  significant 
digital presence (COM(2018) 147 final).   
Commission  Recommendation  relating  to  the  corporate  taxation  of  a  significant  digital  presence 
(C(2018) 1650 final).  

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(10) 

In  particular,  taxable  revenues  should  be  those  resulting  from  the  provision  of  the 
following services: (i) the placing on a digital interface of advertising targeted at users 
of that interface; (ii) the making available of multi-sided digital interfaces which allow 
users to find other users and to interact with them, and which may also facilitate the 
provision  of  underlying  supplies  of  goods  or  services  directly  between  users 
(sometimes referred to as "intermediation" services); and (iii) the transmission of data 
collected about users and generated from such users' activities on digital interfaces. If 
no  revenues  are  obtained  from  the  supply  of  such  services,  there  should  be  no  DST 
liability. Other revenues obtained by the entity providing such services but not directly 
stemming from such supplies should also fall outside the scope of the tax.  

(11)  Services  consisting  in  the  placing  on  a  digital  interface  of  a  client's  advertising 
targeted at users of that interface should not be defined by reference to who owns the 
digital interface through which the advertising appears on a user's device, but rather by 
reference  to  the  entity  responsible  for  enabling  the  advertising  to  appear  on  that 
interface.  This  is  because  the  value  for  a  business  placing  a  client's  advertising  on  a 
digital  interface  lies  with  user  traffic  and  the  user  data  which  is  typically  taken  into 
account for the purposes of the placement, regardless of whether the interface belongs 
to the business itself or to a third party who is renting out the digital space where the 
advertisement  will  appear.  However,  it  should  be  clarified  that  in  cases  where  the 
supplier of the advertising service and the owner of the digital interface are different 
entities, the latter should not be considered to have provided a taxable service for DST 
purposes. This is in order to avoid possible cascading effects and double taxation. 

(12)  Services provided by multi-sided digital interfaces should be defined by reference to 
their  capacity  to  enable  users  to  find  other  users  and  to  interact  with  them.  The 
differential aspect of multi-sided digital interfaces is that they allow a user interaction 
which  could  not  take  place  without  the  interface  matching  users  with  each  other  (in 
other words, the interface allows users to get in touch with other users). Some services 
typically referred to as communication or payment services, such as instant messaging 
services,  e-mail  services  or  e-payment  services,  may  also  be  seen  as  facilitating  the 
interaction  between  users  through  a  digital  interface,  but  users  cannot  usually  get  in 
touch  with  each  other  unless  they  have  already  established  contact  by  other  means. 
The revenues resulting from the supply of communication or payment services should 
therefore remain outside the scope of the tax because such suppliers do not operate as 
a  marketplace,  but  rather  produce  support  software  or  other  information  technology 
instruments allowing customers to reach out to other persons with whom they already 
have a relationship in most cases.  

(13)  For  cases  involving  multi-sided  digital  interfaces  that  facilitate  an  underlying  supply 
of goods or services directly between users of the interface, the underlying transactions 
and the revenues obtained by users from those transactions should remain outside the 
scope of the tax. The revenues resulting from retail activities consisting in the sale of 
goods or services which are contracted online via the website of the supplier of such 
goods or services, and where the supplier does not act as an intermediary, should also 
be  outside  the  scope  of  DST  because  the  value  creation  for  the  retailer  lies  with  the 
goods  or  services  provided  and  the  digital  interface  is  only  used  as  a  means  of 
communication.  Whether  a  supplier  is  selling  goods  or  services  online  on  his  own 
account  or  providing  intermediation  services  would  be  determined  by  taking  into 
account  the  legal  and  economic  substance  of  a  transaction,  as  reflected  in  the 
arrangements  between  the  relevant  parties.  For  instance,  a  supplier  of  a  digital 
interface  where  third-party  goods  are  made  available  could  be  said  to  provide  an 

EN 

17 

  EN 

 
intermediation  service  (in  other  words,  the  making  available  of  a  multi-sided  digital 
interface)  where  no  significant  inventory  risks  are  assumed,  or  where  it  is  the  third 
party effectively setting the price of such goods.    

(14)  Services  consisting  in  the  supply  of  digital  content  by  an  entity  through  a  digital 
interface  should  be  excluded  from  the  scope  of  the  tax,  regardless  of  whether  the 
digital content is owned by that entity or that entity has acquired the rights to distribute 
it. Even if some sort of interaction between the recipients of such digital content may 
be  allowed  and  therefore  the  supplier  of  such  services  could  be  seen  as  making 
available a multi-sided digital interface, it is less clear that the user plays a central role 
in  the  creation  of  value  for  the  company  supplying  the  digital  content.  Instead,  the 
focus  from  the  perspective  of  value  creation  is  on  the  digital  content  itself  which  is 
supplied by the entity. Therefore the revenues obtained from such supplies should fall 
outside the scope of the tax.  

(15)  Digital  content  should  be  defined  to  mean  data  supplied  in  digital  form,  such  as 
computer  programmes,  applications,  games,  music,  videos  or  texts,  irrespective  of 
whether they are accessed through downloading or streaming, and other than the data 
represented  by  a  digital  interface  itself.  This  is  to  capture  the  different  forms  which 
digital content can take when acquired by a user, which does not alter the fact that the 
sole  or  main  purpose  from  the  user's  perspective  is  the  acquisition  of  the  digital 
content.   

(16)  The service described in recital (14) should be distinguished from a service consisting 
in  the  making  available  of  a  multi-sided  digital  interface  through  which  users  can 
upload  and  share  digital  content  with  other  users,  or  the  making  available  of  an 
interface that facilitates an underlying supply of digital content directly between users. 
These  latter  services  constitute  a  service  of  intermediation  and  should  therefore  fall 
within the scope of DST, regardless of the nature of the underlying transaction.  

(17)  Taxable  services  consisting  in  the  transmission  of  data  collected  about  users  should 
cover  only  data  which  has  been  generated  from  such  users'  activities  in  digital 
interfaces,  but  not  data  which  has  been  generated  from  sensors  or  other  means  and 
collected  digitally.  This  is  because  the  services  within  the  scope  of  DST  should  be 
those using digital interfaces as a way to create user input which they monetise, rather 
than services using interfaces only as a way to transmit data generated otherwise. DST 
should therefore not be a tax on the collection of data, or the use of data collected by a 
business for the internal purposes of that business, or the sharing of data collected by a 
business  with  other  parties  for  no  consideration.  What  DST  should  target  is  the 
generation  of  revenues  from  the  transmission  of  data  obtained  from  a  very  specific 
activity (users' activities on digital interfaces). 

(18)  Services  regulated  in  points  (1)  to  (9)  of  Section  A  of  Annex  I  to  Directive 
2014/65/EU of the European Parliament and of the Council8 and provided by trading 
venues  or  systematic  internalisers,  as  defined  in  that  Directive,  or  by  regulated 
crowdfunding service providers should not fall within the scope of DST. In addition, 
services  consisting  in  the  facilitation  of  the  granting  of  loans  and  provided  by 
regulated  crowdfunding  service  providers  should  not  fall  within  the  scope  of  DST. 
Regulated  crowdfunding  service  providers  refers  to  providers  of  services  who  are 

8 

Directive 2014/65/EU  of  the European Parliament  and of  the  Council of 15  May 2014 on  markets  in 
financial  instruments  and  amending  Directive  2002/92/EC  and  Directive  2011/61/EU  (OJ  L  173, 
12.6.2014, p. 349). 

EN 

18 

  EN 

 
                                                 
subject  to  any  future  Union  rules  adopted  under  Article  114  of  the  TFUE  for  the 
regulation of crowdfunding services.  

(19)  Multi-sided  digital  interfaces  which  allow  users  to  receive  or  to  know  about  the 
existence  of  trade  execution  services,  investment  services  or  investment  research 
services,  such  as  those  made  available  by  the  entities  referred  to  above,  often  imply 
user interaction. However, the user does not play a central role in the creation of value 
for  the  entity  making  available  a  digital  interface.  Instead,  the  value  lies  with  the 
capacity  of  such  an  entity  to  bring  together  buyers  and  sellers  of  financial  products 
under specific and distinctive conditions which would not occur otherwise (compared, 
for  instance,  to  transactions  concluded  outside  such  interfaces  directly  between  the 
counterparties). A service consisting in making available a digital interface by such an 
entity  goes  beyond  the  mere  facilitation  of  transactions  in  financial  instruments 
between  users  of  such  an  interface.  In  particular,  the  regulated  services  which  are 
excluded  from  the  scope  of  this  Directive  aim  at  providing  a  safe  environment  for 
financial  transactions.  The  entity  providing  these  services  therefore  determines  the 
specific conditions under which such financial transactions can be executed in order to 
guarantee  essential  elements  such  as  the  quality  of  execution  of  the  transactions,  the 
level  of  transparency  in  the  market  and  fair  treatment  of  investors.  Finally,  such 
services have the essential and distinct objective of facilitating funding, investments or 
savings.  

(20)  As  regards  crowdfunding  platforms,  investment  and  lending  based  crowdfunding 
should  be  outside  the  scope  of  the  tax  since  the  providers  of  such  services  play  the 
same  role  as  that  of  trading  venues  and  systematic  internalisers,  and  hence  do  not 
constitute  intermediation.  However,  services  provided  by  crowdfunding  platforms 
which  are  not  investment  and  lending  based  and  constitute  intermediation,  such  as 
donation  or  reward  based  crowdfunding,  or  services  provided  by  such  platforms 
consisting in the placing of advertising, should fall within the scope of this Directive. 

(21)  Since  data  transmission  by  trading  venues,  systematic  internalisers  and  regulated 
crowdfunding  service  providers  is  limited  to  and  forms  part  of  the  provision  of  the 
regulated financial services described above and is regulated as such under Union law, 
the  provision  of  data  transmission  services  by those  entities  should  also  be  excluded 
from the scope of DST. 

(22)  Only  certain  entities  should  qualify  as  taxable  persons  for  the  purposes  of  DST, 
regardless  of  whether  they  are  established  in  a  Member  State  or  in  a  non-Union 
jurisdiction. In particular, an entity should qualify as a taxable person only if it meets 
both of the following conditions: (i) the total amount of worldwide revenues reported 
by the entity for the latest complete financial year for which a financial statement is 
available  exceeds  EUR  750  000  000;  and  (ii)  the  total  amount  of  taxable  revenues 
obtained by the entity within the Union during that financial year exceeds EUR 50 000 
000.  

(23)  The  first  threshold  (total  annual  worldwide  revenues)  should  limit  the  application  of 
DST  to  the  companies  of  a  certain  scale,  which  are  the  ones  mainly  able  to  provide 
those digital services for which user contribution plays a fundamental role, and which 
heavily  rely  on  extensive  user  networks,  large  user  traffic,  and  the  exploitation  of  a 
strong market position. Such business models, which depend on user value creation for 
obtaining revenues and are only viable if carried out by companies with a certain size, 
are the ones responsible for the higher difference between where their profits are taxed 
and where  value  is created. Moreover, the opportunity  of engaging in aggressive tax 

EN 

19 

  EN 

 
planning  lies  with  larger  companies.  That  is  why  the  same  threshold  has  been 
proposed  in  other  Union  initiatives9.  Such  a  threshold  is  also  intended  to  bring legal 
certainty,  given  that  it  would  make  it  easier  and  less  costly  for  companies  and  tax 
authorities  to  determine  whether  an  entity  is  liable  to  DST.  It  also  excludes  small 
enterprises  and  start-ups  for  which  the  compliance  burdens  of  the  new  tax  would  be 
likely to have a disproportionate effect.  

(24)  The  second  threshold  (total  annual  taxable  revenues  in  the  Union)  should  limit  the 
application  of  the  tax  to  cases  where  there  is  a  significant  digital  footprint  at  Union 
level  in  relation  to  the  type  of  revenues  covered  by  DST.  It  should  be  set  at  Union 
level  in  order  to  disregard  differences  in  market  sizes  which  may  exist  within  the 
Union.  

(25)  To comply with the existing legal framework, any entity qualifying as a taxable person 
and  obtaining  taxable  revenues  treated  as  obtained  in  a  Member  State  should  be 
subject to DST in that Member State, irrespective of whether that entity is established 
in that Member State, in another Member State or in a non-Union jurisdiction.  

(26)  Special  rules  should  be  set  out  for  entities  belonging  to  a  consolidated  group  for 
financial  accounting  purposes.  The  revenues  obtained  by  an  entity  from  supplies  to 
other entities belonging to the same group for financial accounting purposes should be 
excluded from the scope of the new tax. For the purposes of determining whether an 
entity  is  above  the  applicable  thresholds  and  thus  qualifies  as  a  taxable  person,  the 
thresholds should be applied in respect of total consolidated group revenues.  

(27) 

In  order  to  alleviate  possible  cases  of  double  taxation  where  the  same  revenues  are 
subject to the corporate income tax and DST, it is  expected that Member States will 
allow businesses to deduct the DST paid as a cost from the corporate income tax base 
in their territory, irrespective of whether both taxes are paid in the same Member State 
or in different ones.  

(28)  The taxable revenues of an entity should be treated as obtained in a Member State in a 
tax  period  if  the  users  with  respect  to  a  taxable  service  provided  by  that  entity  are 
located  in  that  Member  State.  A  user  should  be  deemed  to  be  located  in  a  Member 
State in a tax period on the basis of certain specific rules, determined for each of the 
taxable services and based on the place where a user's device has been used.  

(29)  Where  the  users  with  respect  of  a  given  taxable  service  are  located  in  different 
Member  States  or  non-Union  jurisdictions,  the  relevant  taxable  revenues  obtained 
from that service should be allocated to each Member State in a proportional way on 
the basis of certain specific allocation keys. Such keys should be set out depending on 
the nature of each taxable service and the distinctive elements triggering the receipt of 
revenues for the provider of such a service.  

(30) 

In  the  case  of  a  taxable  service  consisting  in  the  placing  of  advertising  on  a  digital 
interface, the number of times an advertisement has appeared on users' devices in a tax 
period in a Member State should be taken into account for the purposes of determining 
the  proportion  of  taxable  revenues  to  be  allocated  in  that  tax  period  to  that  Member 
State.  

9 

See Article 2 of the Proposal for a Council Directive on a Common Consolidated Corporate Tax Base 
(CCCTB) (COM(2016) 683 final).  

EN 

20 

  EN 

 
                                                 
(31)  As regards the making available of multi-sided digital interfaces, in order to determine 
the  proportion  of  taxable  revenues  to  be  allocated  to  a  Member  State,  a  distinction 
should be made between cases where the interface facilitates underlying transactions 
directly between users and cases where it does not. In cases involving the facilitation 
of  underlying  transactions,  the  allocation  of  taxable  revenues  in  a  tax  period  to  a 
Member State should be carried out on the basis of the number of users who conclude 
such a transaction in that tax period while using a device in that Member State. This is 
because  that  is  the  action  usually  generating  revenues  for  the  business  making  the 
interface available. Taxing rights over the revenues of the business making available 
the  interface  should  be  allocated  to  Member  States  where  the  users  concluding 
underlying transactions are located, whether the users are the sellers of the underlying 
goods or  services or  the buyers. This  is  because both  of them generate value for the 
multi-sided  digital  interface  through  their  participation,  given  that  the  role  of  the 
interface is to match supply and demand. However, if the intermediation service does 
not involve the facilitation of underlying transactions, revenues are typically obtained 
through  periodic  payments  after  having  registered  or  opened  an  account  on  a  digital 
interface. Hence, for the purposes of allocating taxable revenues to a Member State in 
a  tax  period,  the  number  of  users  in  that  tax  period  holding  an  account  which  was 
opened using a device in that Member State, whether opened during that tax year or an 
earlier one, should be taken into account.  

(32)  As  regards  the  transmission  of  data  collected  about  users,  the  allocation  of  taxable 
revenues  in  a  tax  period  to  a  Member  State  should  take  into  account  the  number  of 
users from whom data transmitted in that tax period has been generated as a result of 
such users having used a device in that Member State.  

(33) 

Identifying the place where a user's device has been used and, therefore, the place of 
taxation  should  be  possible  due  to  the  Internet  Protocol  (IP)  address  of  the  user's 
device or, if more accurate, other means of geolocation. The place of taxation should 
not take into account whether users have contributed in money to the generation of the 
revenue, the place from where the payment in exchange for the supplies giving rise to 
a  DST  liability  has  been  made,  or  the  place  where  a  possible  supply  of  underlying 
goods or services contracted via a multi-sided digital interface has been made.  

(34)  Any processing of personal data carried out in the context of DST should be conducted 
in accordance with Regulation (EU) 2016/679 of the European Parliament and of the 
Council10, including that which may be necessary in relation to Internet Protocol (IP) 
addresses or other means of geolocation. In  particular,  regard should be given to the 
need to provide appropriate technical and organisational measures to comply with the 
rules relating to the lawfulness and security of processing activities, the provision of 
information  and  the  rights  of  data  subjects. Whenever  possible,  personal  data  should 
be rendered anonymous.  

(35)  The taxable revenues should be equal to the total gross revenues obtained by a taxable 
person,  net  of  value  added  tax  and  other  similar  taxes.  Taxable  revenues  should  be 
recognised  as  obtained  by  a  taxable  person  at  the  time  when  they  become  due, 
regardless of whether they have actually been paid by then. DST should be chargeable 

10 

Regulation  (EU)  2016/679  of  the  European  Parliament  and  of  the  Council  of  27  April  2016  on  the 
protection of natural persons with regard to the processing of personal data and on the free movement of 
such data, and repealing Directive 95/46/EC (General Data Protection Regulation) (OJ L 119, 4.5.2016, 
p. 1).   

EN 

21 

  EN 

 
                                                 
in a Member State on the proportion of taxable revenues obtained by a taxable person 
in  a  tax  period  that  is  treated  as  obtained  in  that  Member  State,  and  should  be 
calculated by applying the DST rate to that proportion. There should be a single DST 
rate  at  Union  level  in  order  to  avoid  distortions  in  the  Single  Market.  The  DST  rate 
should  be  set  at  3%,  which  achieves  an  appropriate  balance  between  revenues 
generated  by  the  tax  and  accounting  for  the  differential  DST  impact  for  businesses 
with different profit margins.  

(36)  Taxable persons providing taxable services should be liable for the payment of DST, 
as well as responsible to fulfil a series of administrative obligations. A simplification 
mechanism in the form of a One-Stop-Shop (OSS) should be set up for taxable persons 
with DST liability in one or more Member States, so that all their DST obligations can 
be fulfilled at once (identification, submission of the DST return, and payment). The 
obligations  should  be  fulfilled  in  a  single  Member  State  (Member  State  of 
identification), which should collect the information and the payment of the DST on 
behalf  of  other  Member  States  where  the  DST  is  due,  and  subsequently  share  that 
relevant information and the collected DST amounts with them. Such a mechanism is 
without prejudice to DST being owed by the taxable person directly to each Member 
State where DST is due. Accordingly, each Member State where DST is due should be 
entitled to enforce payment of DST directly against the taxable person liable for it, as 
well  as  to  carry  out  tax  audits  and  control  measures  aimed  at  examining  a  taxable 
person's DST liability. Such enforcement and control measures should be governed by 
the rules and procedures applicable in each Member State where DST is due.   

(37)  Member  States  should  be  able  to  lay  down  accounting,  record-keeping  or  other 
obligations  aimed  at  ensuring  that  the  DST  due  is  effectively  paid,  as  well  as  other 
measures to prevent tax evasion, avoidance and abuse.  

(38) 

In  order  to  ensure  uniform  conditions  for  the  implementation  of  this  Directive  as 
regards the administrative obligations to be fulfilled and the exchanges of information 
between  Member  States  necessary  for  the  functioning  of  the  OSS,  implementing 
powers should be conferred on the Commission. The Commission should also be able 
to propose common rules concerning accounting, record-keeping or other obligations 
to be laid down by Member States. Those powers should be exercised in accordance 
with Regulation (EU) No182/2011 of the European Parliament and of the Council11. 

(39)  Member States should, wherever necessary, make use of the provisions adopted by the 
Union regarding administrative cooperation in tax matters such as Council Directives 
2011/16/EU12 and 2010/24/EU13, or of other measures available internationally, such 
as  the  Multilateral  Convention  on  Mutual  Administrative  Assistance  in  Tax  Matters, 
Article 26 of the OECD Model Tax Convention and the OECD Model Agreement on 
Exchange of Information in Tax Matters.  

(40) 

In  accordance  with  the Joint  Political  Declaration  of  28  September  2011  of  Member 
States  and  the  Commission  on  explanatory  documents14,  Member  States  have 

11 

12 

13 

14 

Regulation  (EU)  No  182/2011  of  the  European  Parliament  and  of  the  Council  of  16  February  2011 
laying down the rules and general principles concerning mechanisms for control by Member States of 
the Commission's exercise of implementing powers (OJ L 55, 28.2.2011, p.13).  
Council  Directive  2011/16/EU  of  15 February  2011  on  administrative  cooperation  in  the  field  of 
taxation and repealing Directive 77/799/EEC (OJ L 64, 11.3.2011, p. 1).  
Council  Directive  2010/24/EU  of  16 March  2010  concerning  mutual  assistance  for  the  recovery  of 
claims relating to taxes, duties and other measures (OJ L 84, 31.3.2010, p. 1). 
OJ C 369, 17.12.2011, p. 14. 

EN 

22 

  EN 

 
                                                 
undertaken  to  accompany,  in  justified  cases,  the  notification  of  their  transposition 
measures  with  one  or  more  documents  explaining  the  relationship  between  the 
components  of  a  directive  and  the  corresponding  parts  of  national  transposition 
instruments. With regard to this Directive, the legislator considers the transmission of 
such documents to be justified. 

(41)  The  objectives  of  this Directive  aim  at  protecting  the integrity  of  the Single  Market, 
ensuring  its  proper  functioning  and  avoiding  distortion  of  competition.  Since  those 
objectives, by their very nature, cannot be sufficiently achieved by Member States but 
can  rather  be  better  achieved  at  Union  level,  the  Union  may  adopt  measures,  in 
accordance  with  the  principle  of  subsidiarity  as  set  out  in  Article  5  of  the  Treaty  on 
European  Union.  In  accordance  of  proportionality,  as  set  out  in  that  Article,  this 
Directive does not go beyond what is necessary in order to achieve those objectives, 

HAS ADOPTED THIS DIRECTIVE: 

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23 

  EN 

 
Chapter 1 

SUBJECT MATTER AND DEFINITIONS  

Article 1 
Subject matter  

This Directive establishes the common system of a digital services tax ('DST') on the revenues 
resulting from the provision of certain digital services. 

Article 2  
Definitions 

For the purposes of this Directive, the following definitions shall apply:  

(1) 

(2) 

(3) 

(4) 

(5) 

(6) 

'entity' means any legal person or legal arrangement that carries on business through 
either a company or a structure that is transparent for tax purposes;  

'consolidated group for financial accounting purposes' means all entities that are fully 
included  in  consolidated  financial  statements  drawn  up  in  accordance  with  the 
International Financial Reporting Standards or a national financial reporting system;  

'digital  interface'  means  any  software,  including  a  website  or  a  part  thereof  and 
applications, including mobile applications, accessible by users; 

'user' means any individual or business; 

'digital content' means data supplied in digital form, such as computer programmes, 
applications, music, videos, texts, games and any other software, other than the data 
represented by a digital interface; 

'Internet Protocol (IP) address' means a series of digits assigned to networked devices 
to facilitate their communication over the internet;  

(7) 

'tax period' means a calendar year.  

Article 3  
Taxable revenues 

1. 

The  revenues  resulting  from  the  provision  of  each  of  the  following  services  by  an 
entity shall qualify as 'taxable revenues' for the purposes of this Directive: 

(a) 

(b) 

the  placing  on  a  digital  interface  of  advertising  targeted  at  users  of  that 
interface;  

the  making  available  to  users  of  a  multi-sided  digital  interface  which  allows 
users  to  find  other  users  and  to  interact  with  them,  and  which  may  also 
facilitate  the  provision  of  underlying  supplies  of  goods  or  services  directly 
between users; 

(c) 

the  transmission  of  data  collected  about  users  and  generated  from  users' 
activities on digital interfaces.  

2. 

The  reference  in  paragraph  1  to  revenues  shall  include  total  gross  revenues,  net  of 
value added tax and other similar taxes.   

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24 

  EN 

 
3. 

Point (a) of paragraph 1 shall apply whether or not the digital interface is owned by 
the entity responsible for placing the advertising on it. Where the entity placing the 
advertising does  not  own  the  digital  interface,  that  entity,  and  not  the owner  of  the 
interface, shall be considered to be providing a service falling within point (a). 

4. 

Point (b) of paragraph 1 shall not include: 

(a) 

(b) 

(c) 

the  making  available  of  a  digital  interface  where  the  sole  or  main  purpose  of 
making  the  interface  available  is  for  the  entity  making  it  available  to  supply 
digital  content  to  users  or  to  supply  communication  services  to  users  or  to 
supply payment services to users; 

the supply by a trading venue or a systematic internaliser of any of the services 
referred  to  in  points  (1)  to  (9)  of  Section  A  of  Annex  I  to  Directive 
2014/65/EU; 

the supply by a regulated crowdfunding service provider of any of the services 
referred  to  in  points  (1)  to  (9)  of  Section  A  of  Annex  I  to  Directive 
2014/65/EU, or a service consisting in the facilitation of the granting of loans.  

Point (c) of paragraph 1 shall not include the transmission of data by a trading venue, 
systematic internaliser or regulated crowdfunding service provider. 

In paragraphs 4 and 5: 

(a) 

(b) 

'trading venue' and 'systematic internaliser' have the meanings given in points 
(24) and (20) respectively of Article 4(1) of Directive 2014/65/EU; 

'regulated  crowdfunding  service  provider'  means  a  provider  of  crowdfunding 
services  who 
to  authorisation  and  supervision  under  any 
harmonisation  measure  adopted  under  Article  114  of  the  Treaty  for  the 
regulation of crowdfunding services.  

is  subject 

Revenues resulting from the provision of a service falling within paragraph 1 by an 
entity belonging to a consolidated group for financial accounting purposes to another 
entity in that same group shall not qualify as taxable revenues for the purposes of this 
Directive.   

If  an  entity  belonging  to  a  consolidated  group  for  financial  accounting  purposes 
provides  a  service  falling  within  paragraph  1  and  the  revenues  resulting  from  the 
provision of that service are obtained by another entity in the group, those revenues 
shall be deemed for the purposes of this Directive to have been obtained by the entity 
providing the service. 

Services  falling  within  paragraph  1  are  referred  to  in  Chapters  2  and  3  as  'taxable 
services'. 

Article 4  
Taxable person 

'Taxable person', with respect to a tax period, shall mean an entity meeting both of 
the following conditions: 

(a) 

(b) 

the total amount of worldwide revenues reported by the entity for the relevant 
financial year exceeds EUR 750 000 000;  

the  total  amount  of  taxable  revenues  obtained  by  the  entity  within  the  Union 
during the relevant financial year exceeds EUR 50 000 000.  

5. 

6. 

7. 

8. 

9. 

1. 

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2. 

3. 

4. 

5. 

6. 

Where  an  entity  reports  or  obtains  revenues  in  a  currency  other  than  euro,  the 
revenues shall be converted into euro for the purposes of paragraph 1 by applying the 
exchange rate as published in the Official Journal of the European Union on the last 
date of the relevant financial year or, if there is no publication on that day, the rate 
published on the previous day. 

In paragraphs 1 and 2, 'the relevant financial year' means the financial year covered 
by the latest available of the financial statements issued by the entity before the end 
of the tax period in question. 

The  rule  in  Article  5(1)  shall  apply  in  determining  under  paragraph  1(b)  whether 
taxable revenues are obtained within the Union.  

Taxable  revenues  shall  be  recognised  for  the  purposes  of  this  Directive  as  having 
been  obtained  at  the  time  when  they  fall  due,  irrespective  of  whether  the  relevant 
amounts have actually been paid. 

If the entity referred to in paragraph 1 belongs to a consolidated group for financial 
accounting  purposes,  that  paragraph  shall  be  applied  instead  to  the  worldwide 
revenues reported by, and taxable revenues obtained within the Union by, the group 
as a whole.  

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Chapter 2 

PLACE OF TAXATION, CHARGEABILITY AND CALCULATION OF THE TAX 

Article 5  
Place of taxation 

1. 

2. 

Taxable  revenues  obtained  by  an  entity  in  a  tax  period  shall  be  treated  for  the 
purposes of this Directive as obtained in a Member State in that tax period if users 
with respect to the taxable service are located in that Member State in that tax period.  

The first subparagraph applies irrespective of whether such users have contributed in 
money to the generation of those revenues. 

With respect to a taxable service, a user shall be deemed to be located in a Member 
State in a tax period if: 

(a) 

in the case of a service falling within Article 3(1)(a), the advertising in question 
appears  on  the  user's  device  at  a  time  when  the  device  is  being  used  in  that 
Member State in that tax period to access a digital interface;  

(b) 

in the case of a service falling within Article 3(1)(b):  

(i) 

(ii) 

if  the  service  involves  a  multi-sided  digital  interface  that  facilitates  the 
provision  of  underlying  supplies  of  goods  or  services  directly  between 
users,  the  user  uses  a  device  in  that  Member  State  in  that  tax  period  to 
access  the  digital  interface  and  concludes  an  underlying  transaction  on 
that interface in that tax period; 

if  the  service  involves  a  multi-sided  digital  interface  of  a  kind  not 
covered  by  point  (i),  the  user  has  an  account  for  all  or  part  of  that  tax 
period  allowing  the  user  to  access  the  digital  interface  and  that  account 
was opened using a device in that Member State;  

(c) 

in the case of a service falling within Article 3(1)(c), data generated from the 
user  having  used  a  device  in  that  Member  State  to  access  a  digital  interface, 
whether  during  that  tax  period  or  any  previous  one,  is  transmitted  in  that  tax 
period.   

3. 

For each tax period, the proportion of an entity's total taxable revenues that is treated 
under paragraph 1 as obtained in a Member State shall be determined as follows: 

(a) 

as  regards  taxable  revenues  resulting  from  the  provision  of  services  falling 
within  Article  3(1)(a),  in  proportion  to  the  number  of  times  an  advertisement 
has appeared on users' devices in that tax period; 

(b) 

as  regards  taxable  revenues  resulting  from  the  provision  of  services  falling 
within Article 3(1)(b): 

(i) 

if  the  service  involves  a  multi-sided  digital  interface  that  facilitates  the 
provision  of  underlying  supplies  of  goods  or  services  directly  between 
users, in proportion to the number of users having concluded underlying 
transactions on the digital interface in that tax period;  

(ii) 

if  the  service  involves  a  multi-sided  digital  interface  of  a  kind  not 
covered  by  point  (i),  in  proportion  to  the  number  of  users  holding  an 

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account  for  all  or  part  of  that  tax  period  allowing  them  to  access  the 
digital interface; 

(c) 

as  regards  taxable  revenues  resulting  from  the  provision  of  services  falling 
within  Article  3(1)(c),  in  proportion  to  the  number  of  users  from  whom  data 
transmitted  in  that  tax  period  has  been  generated  as  a  result  of  users  having 
used  a  device  to  access  a  digital  interface,  whether  in  that  tax  period  or  a 
previous one. 

4. 

For the purposes of determining the place of taxation of the taxable revenues subject 
to DST, the following elements shall not be taken into account: 

(a) 

if there is an underlying supply of goods or services directly between the users 
of a multi-sided digital interface referred to in Article 3(1)(b), the place where 
that underlying supply takes place;  

(b) 

the place from which any payment for the taxable service is made.  

5. 

6. 

For the purposes of this Article, the Member State where a user's device is used shall 
be determined by reference to the Internet Protocol (IP) address of the device or, if 
more accurate, any other method of geolocation.  

The data that may be collected from users for the purposes of applying this Directive 
shall  be  limited  to  data  indicating  the  Member  State  where  the  users  are  located, 
without allowing for the identification of those users.  

Article 6  
Chargeability 

DST shall be chargeable in a Member State on the proportion of taxable revenues obtained by 
a  taxable  person  in  a  tax  period  that  is  treated  under  Article  5  as  obtained  in  that  Member 
State. The DST shall become due in that Member State on the next working day following the 
end of that tax period. 

Article 7  
Calculation of the tax 

DST shall be calculated for a Member State for a tax period by applying the DST rate to the 
proportion of taxable revenues referred to in Article 6. 

The DST rate shall be 3%.    

Article 8 
Rate 

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Chapter 3 

OBLIGATIONS 

1. 

2. 

1. 

2. 

Article 9  
Person liable for payment and fulfilment of obligations 

DST  shall  be  payable  and  the  obligations  in  this  Chapter  shall  be  fulfilled  by  the 
taxable person providing the taxable services. 

A  consolidated  group  for  financial  accounting  purposes  shall  be  permitted  to 
nominate  a  single  entity  within  that  group  for  the  purposes  of  paying  DST  and 
fulfilling  the  obligations  in  this  Chapter  on  behalf  of  each  taxable  person  in  that 
group who is liable to DST.  

Article 10 
Identification 

A  taxable  person  shall  notify  the  Member  State  of  identification  that  the  taxable 
person is liable to DST in one or more Member States.  

The  notification  shall  be  made  electronically  by  no  later  than  10  working  days 
following the end of the first tax period for which the taxable person is liable to DST 
under this Directive ('the first chargeable period').  

3. 

The Member State of identification shall be: 

(a) 

(b) 

the  Member  State  in  which  the  taxable  person  is  liable  to  DST  for  the  first 
chargeable tax period; 

if  the  taxable  person  is  liable  to  DST  for  that  tax  period  in  more  than  one 
Member State, such one of those Member States as the taxable person chooses. 

4. 

The  notification  required  under  paragraph  1  shall  include  at  least  the  following 
information with respect to the taxable person: 

(a)  name; 

(b) 

trading name, if different from the name; 

(c)  postal address; 

(d) 

electronic address; 

(e)  national tax number, if any; 

(f) 

contact name; 

(g) 

telephone number; 

(h)  Member States where the taxable person is liable to DST; 

(i) 

IBAN or OBAN number.  

5. 

6. 

The taxable person shall notify the Member State of identification of any changes in 
the information provided under paragraph 4.  

When  an  entity  is  nominated  under  Article  9(2),  the  information  provided  by  that 
nominated entity under this Article with respect to each taxable person in the group 

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7. 

1. 

2. 

3. 

shall also include information with respect to itself in relation to the items listed in 
points (a) to (g) of paragraph 4.     

The  Commission  may  adopt  implementing  acts  to  determine  a  common  format  for 
the notification required under this Article. Those implementing acts shall be adopted 
in accordance with the procedure provided for in Article 24(2).  

Article 11 
Identification number 

The Member State of identification shall allocate to the taxable person an individual 
identification number for the purposes of DST and shall notify the taxable person of 
that number by electronic means within 10 working days from the day on which the 
notification under Article 10 was received.  

Each  individual  identification  number  shall  have  a  prefix  in  accordance  with  ISO 
code 3166 Alpha 2 by which the Member State of identification may be identified. 
However,  Greece  and  the  United  Kingdom  shall  use  the  prefix  'EL'  and  'UK' 
respectively.  

Member  States  shall  take  the  measures  necessary  to  ensure  that  their  identification 
systems  allow  taxable  persons  to  be  identified  and  shall  keep  an  identification 
register with all the individual identification numbers allocated by them.   

Article 12 
Deletion from the identification register 

1. 

A taxable person shall notify the Member State of identification by electronic means 
in any of the following circumstances:  

(a) 

(b) 

(c) 

(d) 

the taxable person ceases to obtain taxable revenues that are treated under this 
Directive as obtained in the Union;  

the taxable person ceases to qualify as a taxable person; 

the taxable person ceases to exist; 

the taxable person ceases to be liable to DST in the Union for any other reason. 

2. 

3. 

The  Member  State  of  identification  shall  delete  the  taxable  person  from  the 
identification register at the end of the period of 60 working days following the end 
of  the  tax  period  during  which  the  information  referred  to  in  paragraph  1  was 
notified. 

Article  10  shall  apply  if,  following  deletion  of  a  taxable  person  from  the 
identification  register,  the  taxable  person  becomes  liable  once  again  to  DST  in  the 
Union.  References  in  Article  10  to  the  first  chargeable  tax  period  shall  be  read 
accordingly.  

Article 13 
Change in the Member State of identification 

1. 

Where  a  taxable  person  has  chosen  a  Member  State  of  identification  under  Article 
10(3)(b),  the  taxable  person  shall  be  bound  by  that  choice  for  the  first  chargeable 

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2. 

3. 

4. 

period for which notification is made under Article 10 and for the two following tax 
periods.   

However,  if  the taxable  person ceases  to  be liable  to  DST  in  that  Member  State  of 
identification  chosen  under  Article  10(3)(b),  the  taxable  person  shall  change  its 
Member State of identification in accordance with the requirements of Article 10.  

Any change in a taxable person's Member State of identification shall be notified to 
the existing Member State of identification, and that change shall apply from the tax 
period  following  the  tax  period  in  which  that  information  is  notified.  The  existing 
Member State of identification shall delete the taxable person from the identification 
register in accordance with Article 12(2). 

That  taxable  person  shall  notify  the  new  Member  State  of  identification  in 
accordance  with  Article  10,  and  references  in  that  Article  to  the  first  chargeable 
period shall be to the tax period from which the change applies.  

Article 14 
DST return 

A taxable person shall submit to the Member State of identification a DST return for each tax 
period. The return shall be submitted electronically within 30 working days following the end 
of the tax period covered by the return.  

Article 15 
DST return information 

1. 

The DST return shall show the following information: 

(a) 

(b) 

the individual identification number referred to in Article 11; 

for each Member State where DST is due for the relevant tax period, the total 
amount  of  taxable  revenues  treated  as  obtained  by  the  taxable  person  in  that 
Member State in that tax period, together with the amount of DST due on that 
amount in that Member State for that tax period; 

(c) 

the total DST due from the taxable person in all Member States for the relevant 
tax period.  

The DST return shall also show, with respect to the tax period, the total amount of 
worldwide  revenues  and  total  amount  of  taxable  revenues  within  the  Union 
applicable for the purposes of Article 4(1). 

The  Member  State  of  identification  may  require  the  return  to  be  made  out  in  their 
national currency.  

Upon receipt of a DST return, the Member State of identification shall immediately 
allocate a DST return number to the return. 

Member  States  shall  take  the  measures  necessary  to  ensure  that  their  identification 
systems allow DST returns to be identified and shall keep a DST return identification 
register with all the individual DST return numbers allocated by them.   

The  Commission  may  adopt  implementing  acts  to  determine  a  common  format  for 
the  DST  return  and  the  DST  return  number.  Those  implementing  acts  shall  be 
adopted in accordance with the procedure provided for in Article 24(2).  

2. 

3. 

4. 

5. 

6. 

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1. 

2. 

3. 

4. 

5. 

6. 

7. 

1. 

2. 

3. 

Article 16 
Payment arrangements 

The total DST due from a taxable person in all Member States for a tax period shall 
be paid by the taxable person in the Member State of identification. 

The total DST due shall be paid to the Member State of identification no later than 
30 working  days  following the end of the tax period  concerned and, in making the 
payment, the taxable person shall make reference to the relevant DST return number.  

If  a  taxable  person  makes  a  payment  without  reference  to  the  relevant  DST  return 
number, or the reference number does not correspond to any outstanding DST return, 
the  Member  State  of  identification  may  take  steps  to  clarify  the  issue.  If  the  issue 
remains  unsolved,  the  payment  shall  be  returned  to  the  taxable  person,  and  the 
payment shall not be considered to be made for the purposes of paragraphs 1 and 2. 

Payment  shall  be  made  to  a  bank  account  designated  by  the  Member  State  of 
identification.  

The  Member  State  of  identification  may  require  the  payment  to  be  made  in  their 
national currency.  

A  Member  State  of  identification  which  receives  a  payment  in  excess  of  the  total 
DST due as indicated in the relevant DST return shall reimburse the overpaid amount 
directly to the taxable person concerned. 

Where a Member State of identification has received a payment in respect of a DST 
return  subsequently  found  to  be  incorrect  and  amended  under  Article  17,  and  that 
Member State has already distributed that amount to each Member State where DST 
is due, those Member States where DST is due shall each reimburse their respective 
part of any overpaid amount directly to the taxable person.   

Article 17 
DST return amendments 

Changes  to  the  figures  contained  in  a  DST  return  shall  be  made  only  by  means  of 
amendments to that return and not by adjustments to a subsequent return.  

The amendments referred to  in  paragraph  1 shall  be  submitted electronically to  the 
Member  State  of  identification  within  three  years  of  the  date  on  which  the  initial 
return  was  required  to  be  submitted.  Amendments  after  such  period  shall  be 
governed by the rules and procedures applicable in each Member State respectively 
where DST is due.  

Any  additional  payment  by  a  taxable  person  of  DST  due  derived  from  the 
amendments  in  paragraph  1  shall  be  made  to  the  Member  State  of  identification  in 
accordance  with  Article  16,  and  references  to  'total  DST  due'  shall  be  read 
accordingly. Any reimbursements to a taxable person of DST paid derived from the 
amendments in paragraph 1 shall be made in accordance with Article 16(7).  

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1. 

2. 

3. 

4. 

5. 

Article 18 
Accounting, record-keeping, anti-fraud, enforcement and control measures 

Member  States  shall  lay  down  accounting,  record-keeping  and  other  obligations 
intended  to  ensure  that  the  DST  due  to  the  tax  authorities  is  effectively  paid.  Such 
rules in a Member State shall apply to any entity with DST liability in that Member 
State, irrespective of the Member State of identification of that taxable person.  

The  Commission  may  adopt  implementing  acts  to  determine  the  measures  to  be 
taken  pursuant  to  paragraph  1.  Those  implementing  acts  shall  be  adopted  in 
accordance with the procedure provided for in Article 24(2).  

Member  States  may  adopt  measures  to  prevent  tax  evasion,  avoidance  and  abuse 
with respect to DST.  

A Member State of identification chosen under Article 10 shall act on behalf of the 
other  Member  States  where  DST  is  due  for  the  purposes  of  the  obligations  in  this 
Chapter, but the DST shall be owed by the taxable person directly to each Member 
State where DST is due. Accordingly, each Member State where DST is due shall be 
entitled to enforce payment of the DST directly against the relevant taxable person. 
To  that  extent,  the  rules  and  procedures  of  each  such  Member  State  shall  apply, 
including the rules and procedures relating to penalties, interest and other charges for 
late  payment  or  non-payment  of  DST  and  the  rules  and  procedures  relating  to  the 
enforcement of debts.  

Tax  audits  and  control  measures  by  Member  States  aimed  at  examining  all  the 
information and actions relevant to the calculation of a taxable person's DST liability 
in that Member State shall be governed by the rules and procedures applicable in that 
Member State.   

Article 19 
Appointment of competent authorities 

Each Member State shall designate the competent authority to be responsible in that Member 
State for managing all aspects related to the obligations set out in this Chapter and in Chapter 
4, and shall notify the name and electronic address of that authority to the Commission. The 
names  and  electronic  addresses  of  the  competent  authorities  shall  be  published  by  the 
Commission in the Official Journal of the European Union.  

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Chapter 4 

ADMINISTRATIVE COOPERATION 

Article 20 
Exchange of information as regards identification 

1. 

2. 

3. 

1. 

2. 

3. 

1. 

2. 

3. 

The  Member  State  of  identification  shall  transmit  any  notification  received  by  it 
under Article 10 to the competent authority of each Member State where DST is due. 
The notification shall be transmitted within 10 working days from the day on which 
the notification was received.  

The Member State of identification shall also inform each such Member State of the 
individual  identification  number  allocated  to  the  relevant  taxable  person  under 
Article 11. 

The Member State of identification shall also inform each Member State where DST 
is due of any deletion in the identification register made under Article 12 within 10 
working days from the day on which the deletion has been made.  

Article 21 
Exchange of information as regards the DST return 

The Member State of identification shall transmit DST returns and any amendments 
to DST returns submitted to it under Article 14 or 17 to the competent authority of 
each  Member  State  where  DST  is  due.  The  returns  and  amendments  shall  be 
transmitted within 10 working days from the day on which they were received.  

If  a  DST  return  is  submitted  in  a  currency  other  than  euro,  the  Member  State  of 
identification  shall  convert  the  amounts  into  euro  by  applying  the  exchange  rate  as 
published in the  Official Journal of the European Union on the last date of the tax 
period covered by the return or, if there is no publication on that day, on the previous 
day of publication, and shall transmit that information to the relevant Member States 
alongside the return, or amendment, transmitted to them under paragraph 1.  

The  Member  State  of  identification  shall  transmit  to  the  competent  authorities  of 
each  Member  State  where  DST  is  due  any  other  information  needed  to  link  each 
payment with a relevant DST return. 

Article 22 
Exchange of information as regards payment 

The Member State of identification shall ensure that the amount that a taxable person 
has  paid  under  Article  16  corresponding  to  the  DST  due  in  a  Member  State  other 
than the Member State of identification is transferred  to the competent authority of 
that  other  Member  State.  The  transfer  shall  take  place  within  10  working  days 
following the day on which the payment was received. 

The  amount  referred  to  in  paragraph  1  shall  be  transferred  in  euro  to  the  bank 
account designated by that other Member State.  

Member States shall notify the competent authorities of other Member States of the 
number of the bank account to be used for the purposes of paragraph 2.  

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4. 

5. 

6. 

1. 

2. 

Any amount received by the Member State of identification in a currency other than 
euro shall be converted into euro by applying the exchange rate as published in the 
Official Journal of the European Union on the last date of the tax period covered by 
the  return  or,  if  there  is  no  publication  on  that  day,  on  the  previous  day  of 
publication.  

If  a  taxable  person  pays  a  portion  only  of  the  total  DST  due  from  it,  the  Member 
State  of  identification  shall  ensure  that  that  portion  is  transferred  to  the  competent 
authorities  of  the  Member  States  where  DST  is  due  in  proportion  to  the  tax  due  in 
each Member State. The Member State of identification shall inform the competent 
authorities of the Member States where DST is due thereof. 

If a Member State where DST is due has reimbursed any overpaid amount directly to 
the taxable person under Article 16(7), that Member State shall inform the Member 
State of identification of the amount of those reimbursements.  

Article 23 
Means of information exchange 

Information  and  documentation  to  be  transmitted  under  this  Chapter  shall  be 
transmitted electronically.  

The Commission may adopt implementing acts to determine the technical details by 
which such information and documentation is to be transmitted. Those implementing 
acts shall be adopted in accordance with the procedure provided for in Article 24(2).  

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Chapter 5 

FINAL PROVISIONS 

Article 24 
Committee procedure 

1. 

2. 

1. 

The  Commission  shall  be  assisted  by  a  committee.  That  committee  shall  be  a 
committee within the meaning of Regulation (EU) No 182/2011. 

Where  reference  is  made  to  this  paragraph,  Article  5  of  Regulation  (EU)  No 
182/2011 shall apply.  

Article 25 
Transposition 

Member  States  shall  adopt  and  publish,  by  [31  December  2019]  at  the  latest,  the 
laws,  regulations  and  administrative  provisions  necessary  to  comply  with  this 
Directive. They shall immediately inform the Commission thereof.   

They shall apply those provisions from [1 January 2020]. 

When  Member  States  adopt  those  provisions,  they  shall  contain  a  reference  to  this 
Directive  or  be  accompanied  by  such  a  reference  on  the  occasion  of  their  official 
publication. 

2. 

Member States shall communicate to the Commission the text of the main provisions 
of national law which they adopt in the field covered by this Directive. 

Article 26 
Entry into force 

This Directive shall enter into force on the twentieth day following that of its publication in 
the Official Journal of the European Union. 

Article 27 
Addressees 

This Directive is addressed to the Member States. 

Done at Brussels, 

For the Council 
The President 

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